The Popular Myth: Insurance Is Just A Scam

Since I have been in this business one of the most common phases I have heard is that people feel that insurance and the insurance companies are out to get them. This couldn't be further from the truth. Yes, there are companies that can do a better job in various aspects of there company's operations (i.e. ease of doing business, claims experience, agent experience, and etc.) I recognize that we as an industry have to do all that we can to ensure that the experiences that our client expect are meet by our efforts to deliver a better insurance experience. Here are some reasons why you as a consumer may feel this way and ways that my agency tries overcome these industry feelings:

1.) You pay and never have the need or opportunity to utilize your insurance - No one wakes up with the idea to damage their property or injure someone else. However when an accident does happen you should have the confidence that your insurance company is going to take care of you. Keep in mind that the insurance company is regulated by law to protect you against any covered losses if you have made your premium payments. Just because you never use the insurance doesn't mean that you're not getting value. Remember the reason your purchased the insurance was to protect you from the unknown or unexpected loss.

2.) The insurance company doesn't care about me - Clients typically feel like this when you combine point one above and a lack of communication from the insurance company or their agent. Part of my agency goal is to be an advocate for my clients to ensure that they feel when something happens that they have someone locally that is fighting on their behave. It is also the agent's duty to make sure the client has a good understanding of their insurance polices so that when the unexpected loss happens there is no surprise. My agency strives to be as available as much as possible so that the client always feel that my agency is only a phone call away. Having this type of relationship with your agent helps reduce the feeling that you aren't getting any value from your insurance company.

3.) You feel rates don't reflect your risk - This is another common thing that I hear, "My rates are high and my driving record is clean". I have an earlier post that addresses this statement and it's called "Why do my insurance rates keep going up". You can go back and read that post to gain a deeper understanding of why insurance rates adjust. However in this post, I want to express that insurance is based on the Law of Large Numbers. The insurance company wants and needs to increase it's number of policyholders to help spread out and reduce the risk of loss among it's clients. So yes, your premiums do help cover losses of others but it also works for you in the same way. I try to get my clients to look at insurance like a pre-approved loan for the "unexpected loss" instantly available at the time of loss. Your policy has a minimum payout, in Georgia for auto it's $25,000 for bodily injury per person and $50,000 per accident. This essentially means that you would have at least $25,000 at your disposal should you be involved in an accident and cause an injury to another person. Yes, you have a monthly premium but you would pay a monthly bill to a bank for an open loan. With that said, your rates generally will accurately reflect the risk.

Overall, insurance companies are not the bad guys. They are not perfect but they are in the business of protecting client assets. We as a industry have a lot that we can do better but your experience can be greatly enhanced by having an involved agent and the client having a better understanding of their policy.